Review by IMF on Senegal shows 6% projected growth from agric and others

An International Monetary Fund (IMF) mission led by Ali Mansoor visited Dakar from August 17–30, 2016 to conduct Article IV consultations and discussions on the third review of the three-year arrangement under the Policy Support Instrument (PSI) approved in June 2015.

At the conclusion of the visit, Mr. Mansoor made the following statement:

“The macroeconomic framework remains stable with robust growth. Budget execution in the first six months is satisfactory although customs revenues are below the program target. Overall, the implementation of the PSI remains satisfactory with respect to almost all quantitative criteria and indicative targets for end June 2016.

“The outlook for 2016 and 2017 remains positive with a projected growth rate above 6 percent, driven by a more efficient agriculture, the recovery of industry and continued momentum in the service sector. Inflation should remain low. The IMF team welcomes the authorities’ determination to continue to conduct a sound fiscal policy, including maintaining their original budget deficit target of 4.2% of GDP in 2016. The budget deficit is projected at 3.7% of GDP in 2017.

“The mission and the authorities agreed that the real challenge for Senegal is to maintain sustainable and inclusive growth so as to create jobs for the youth and significantly reduce poverty. In this context, the discussions focused on economic policies and structural reforms that would enable Senegal to maintain the growth momentum, strengthen its inclusiveness and improve the resilience of the economy to domestic, regional and international shocks. This requires the maintenance of a stable macroeconomic framework and the acceleration of reforms to improve productivity and the business environment, and promote the private sector.

“The mission welcomes the authorities’ commitment to continue to implement the Plan Senegal Emergent (PSE) while maintaining a sustainable level of debt. This requires restoring fiscal space through improved revenue mobilization and rationalization of government consumption. Accordingly, the mission encourages the authorities to accelerate the modernization of Tax and Customs administration. Additional efforts are also needed to improve the management of public finances and economic governance and to build capacity to improve the quality of public investment. In this regard, the mission noted the authorities’ determination to continue the computerization of financial processes and administration, including the Treasury and to further strengthen public debt management capacity.

“The mission also welcomes the progress achieved in the process of accession by Senegal to the Special Data Dissemination Standard (SDDS) expected by end of March 2017.

“The mission reiterated the importance of accelerating the implementation of structural reforms, essential for the growth of private investment and the success of the PSE. These include measures to improve the business climate in order to open and provide quality economic space to investors, including small and medium enterprises.

“The IMF Executive Board is tentatively scheduled to discuss the report on the 2016 Consultations under Article IV and the third review under the PSI-supported arrangement in December 2016.

“The mission met with the President of the Republic, the Prime Minister, Ministers in charge of Economy, Finance, Planning, Budget, and other senior government officials and representatives of the banking sector, private sector, civil society and development partners.

“The mission thanks the authorities for their warm hospitality, their close cooperation and frank atmosphere that prevailed throughout the talks.”